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XYLENE POWER LTD.

ELECTRICITY REGULATORY HURDLES

By C. Rhodes

REGULATORY ACCEPTANCE:
1. The Ontario Energy Board (OEB) must both accept that in a non-fossil Uncontrolled Electricity Service (UES) costs applicable to a particular grid connnected party are proportional to that party's peak kVA measured during a billing period. The peak kVA measurement apparatus should have a 90% step response time of 4 hours;
 
2. Legal Metrology should confirm the principle of proportionally allocating electricity costs to tenants or condominium suite owners in a bulk metered building based on each suite's kWh consumption in order to financially enable load management of domestic hot water and space heating in that building.
 
3. The OEB must accept the concept that any party directly connected to the electricity transmission system is a transmission customer. A transmission customer may be a generator, a local distributor or a large load. The connected party's share of the transmission cost is proportional to its measured peak kVA during the billing period. Due to a non-ideal power factor on a particular phase a transmission customer is usually alternately an energy transmitter and an energy receiver;
 
4. The OEB must then accept the principle that generators, local distributors and transmission connected loads must all pay for transmission usage at the same rate;
 
5. The OEB must accept the concept that any party directly connected to a local distribution system is a local distribution customer. A local distribution customer may be a generator or a load. The connected partiy's share of the local distribution system cost plus the local distributor's transmission cost is proportional to that party's peak kVA during a billing period. Due to a non-ideal power factor on a particular phase a local distribution customer is usually alternately an energy transmitter and an energy receiver;
 
6. The OEB must then accept the principle that distribution connected generators must pay for local distribution usage at the same rate as distribution connected loads;
 
7. The OEB must accept the principle that marginal Interruptible Electricity Service (IES) costs should be allocated in proportion to IES kWh consumed;
 
8. The OEB must then accept that the mathematics show that when the amount of distributed generation is relatively small, the generators connected to the high voltage transmission system must bear 2/3 of the transmission costs and 1/3 of the distribution costs;
 
9. Likewise, the OEB must accept that when the amount of distriuted generation is relatively small, parties connected to a distribution system must bear 2/3 of the distribution costs and 1/3 of the transmission costs;
 
10. The OEB must accept that government mandated closing of coal fueled electricity generatiors in Ontario is financially the equivalent of implementing a coal prohibitive fossil carbon emissions tax. This equivalent tax will be about $200 / emitted CO2 tonne;
 
11. The OEB should interface with the Independent Electricity System Operator (IESO) regarding how the parties will implement a new end user electricity rate based on peak kVA and the legal, contractual and social implications of that rate change;
 
12. The IESO will have to modify the FIT rates to include generator capacity factor and hence encourage behind the meter energy storage by wind and solar generators;
 
13. The IESO should offer a new FIT rate for distributed electricity generators with outputs that assist in grid voltage regulation .
 
14. The OEB and the IESO must recommend to the Minister of Energy conversion of the Ontario Uncontrolled Electricity Service (UES) rate to a rate in which UES costs are allocated to loads in proportion to each load's measured peak kVA during the billing period.
 

15. The OEB and the IESO must recommend to the Minister of Energy introduction of an Interruptible Electricity Service (IES) rate with marginal IES costs allocated in proportion to marginal extra kWhe consumed by a load during the billing period.
 

MOE APPROVAL HURDLES:
16. The Minister of Energy must obtain legislative approval to move the global adjustment from kWh to kW or kVA as applicable.
 
16. The Ministry of Energy will have to be fully convinced of the merits of UES cost allocation on the basis of peak kVA during the billing period and marginal IES cost allocation on the basis of IES kWh consumed during the billing period;
 
17. The Minister of Energy should send a letter to the Ontario Energy Board (OEB) requesting that the OEB re-evaluate the present allocation of electricity costs and the metering methodology used to allocate those costs. The Minister's letter to the OEB should specifically instruct the OEB to create a new electricity rate structure that will transition Ontario to zero dependence on fossil fuels for electricity generation. In the new rate regieme generators and loads must be able to connect to the electricity system at any point, including behind existing electricity meters, without rate bias or penalty. The Minister's letter should specifically address the issue of avoiding prohibitive costs that often arise from LDCs' use of monthly peak kVA metering without provisions for mitigating the cost consequences of random equipment maintenance shutdowns and unplanned equipment failures.
 

IESO AND OEB APPROVALS:
18. The IESO should fund OSPE lawyers and witnesses to make the case before the OEB for allocation of UES costs on the basis of peak kVA during the billing period. The contemplated 90% step response time of the kVA metering is 4 hours.;
 
19. The IESO and OEB should intervene in the implementation of electronic smart meters to ensure that their firmware, displays and remote reading facilities include calculation of the parameters required for a distributed power network with multiple independent LDCs such as exists in Ontario. Specific parameters that must be calculated, displayed, stored and remotely read are incident power Ei, absorbed power (Ei - Er) and time T where:
Ei = cumulative incident electrical energy;
Er = cumulative reflected electrical energy;
T = time;
(Tb - Ta) = measurement period;
|Eib - Eia| / (Tb - Ta) = kVA during measurement interval;
[|Eib - Eia| / (Tb - Ta)]p = peak kVA during the billing period;
 
20. The OEB must resolve how interim metering and billing issues will be handled during the multi-year rate transition period;
 
21. The IESO and the OEB should recognize that behind the meter peak co-incident non-fossil electricity generation and behind the meter peak co-incident electricity conservation both achieve the same effect for the ratepayer, so they should be equally financially rewarded.
 

OTHER WORK BY IESO AND OEB:
22. The OEB and the IESO should reassess the criteria for interim Time-Of-Use (TOU) rate setting because high differential electricity rates are required to trigger investment in energy storage. This energy storage is required to minimize future generation and transmission requirements;
 
23. The IESO should offer an Interruptable Electricity Service (IES) rate based on kWhe consumption at a discount from the regular rate. The main purpose of this interruptable power is to displace fossil fuels while providing the Independent Electricity system Operator (IESO) sheddable load for reliability and for electricity system voltage and frequency stabilization;
 

This web page last updated February 12, 2017.

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